California toll road operator files Chapter 11
The company operating South Bay Expressway, a 10-mile toll road near San Diego, has filed for Chapter 11 bankruptcy, but state and company officials say they expect motorists to be unaffected by the filing.
South Bay Expressway L.P., AKA San Diego Expressway L.P., filed for reorganization in U.S. Bankruptcy Court for the Southern District of California March 22. It opened the road November 2007 to operate as a toll road until 2042, when the state takes ownership and will decide whether it will continue charging tolls.
Steve Saville, a California Department of Transportation spokesman, said department lawyers are working with the company, but he does not anticipate expressway users encountering any change in road use at this point.
South Bay CEO Greg Hulsizer said regular maintenance and payments to suppliers will continue and he expects SBE to continue operating the road until the end of its lease.
One factor in the filing is litigation costs involved in a dispute with the contractor, Otay River Constructors, a joint venture of Washington Group and Fluor Corp., which has cost SBE and other plaintiffs $40 million in legal fees over the past three years, Hulsizer said.
That was one of a “perfect storm” of factors that led to the filing, including opening at the beginning of the economic decline, he said. Other factors include:
• 4 to 11 percent decline in customers
• A standstill in new housing starts, coupled with a more than 6 percent increase in foreclosures
• 25 to 30 percent reduction in crossings at the Otay Mesa border crossing.
South Bay Expressway received credit assistance through the Transportation Infrastructure Finance and Innovation Act, authorized under the 1998 Transportation Equity Act for the 21st Century and reauthorized by the 2005 omnibus transportation bill. It was the first TIFIA funded project to open.
When the road opened, SBE described the $635 million highway as developed and operated by Macquarie Infrastructure Group (MIG) and Macquarie Infrastructure Partners. The project was a public-private partnership among Caltrans, San Diego Association of Governments, the Federal Highway Administration and South Bay Expressway.
This year, MIG said MQA, created out of MIG, owns and manages the interests of the MQA portfolio, including the Chicago Skyway and Indiana Toll Road. It also holds investments in the South Bay Expressway, Warnow Tunnel and Transtol. The company stated “these three other businesses are not considered material to MQA’s portfolio.”
"There probably should be some minimum standards. But as long as the ...